Is Jerome Powell Keeping Interest Rates Unchanged Good or Bad for the Market?
The decision to keep interest rates steady can be viewed from two sides, but in the current context, it might signal caution more than confidence.
When interest rates are lowered, borrowing becomes cheaper. That means more people and institutions can take out loans to invest—whether in stocks, cryptocurrencies, or real estate. Lower rates often lead to increased liquidity and risk appetite.
But when rates remain high—currently in the range of 4.25% to 4.5%—borrowing is expensive. This naturally discourages both consumer and investor spending. People tend to stay cautious, preserving capital instead of deploying it.
Add to that the ongoing geopolitical tensions in the Middle East. If the situation escalates or major powers get involved, economic uncertainty will grow. In such cases, people typically shift their money into safer assets like gold instead of taking risky bets in the stock or crypto markets.
In a high-interest rate environment, there's already limited liquidity. If a global crisis triggers a further pullback in capital, the markets could see a sharp decline due to a lack of available cash.
So, in my humble opinion, this pause in rate cuts is a warning signal—not investment advice, just an observation. The Fed is holding back, and so should we—at least until the outlook becomes clearer.
What’s your take on Powell’s stance? Is he playing it safe or missing a chance to support growth?